I’ve sold real estate for a long time and it would be extremely rare for an agent to lend money for repairs. However, there are often times contractors who will do the repairs with payment coming from the house closing. They do this because they have lien rights, performing the work, and know they will be paid.
Good suggestions - tho would be challenging - especially in a hot market. As an alternative - just be careful which inspector you choose. We’ve had good luck looking for one who has an engineering background. If you have a GOOD RE Agent, they should be able to recommend the correct sort of inspector. What you want to avoid is the sort of guy who is just doing this as a job with no particular experience, and thinks he does his job by filling out a checklist. I remember one house we had a contract on. Looked really sweet - but the inspector showed us how there wasn’t a single plumb wall or floor in the house, several spans were inadequately supported, and the whole damn thing was in the process of slowly sliding down the hill it was built on! 
The last couple of houses we bought, we had family members whom we considered knowledgeable in home repairs do the inspection/walk-through. We relied on their assessment as to whether the house was solid or not. Like many have said, heck, even a new build is likely to need money spent within a couple of years. You just want to avoid the big ticket and safety items. Or at least go in with open eyes as to how much you need to be saving how soon in your home repairs/maintenance fund.
When my kid bought her house recently, the inspector wanted to do a sewer inspection (not required), but could not remove the cap and wanted to saw it off. Understandably, the sellers were not thrilled at the prospect. I did not think the sewer inspection necessary (have had some experience w/ sewer issues in past houses), and when I researched such things, I was impressed at how consistently the inspection industry suggested such things as income enhancement.
But banks are leary about writing mortgages for houses with major structural flaws. Cash offer, no problem. But I don’t see a bank accepting a house with a very bad roof as collateral.
Maybe if the house is visibly falling down, but many assessments are based on less than a thorough inspection.
Yes, but if you have a roof bad enough for an inspector to catch it (which might not be visibly bad from the street), you can’t get insurance, and that alobe means no loan. A bad roof has to be dealt with. It’s a catastrophe waiting to happen.
It all depends on the type of mortgage and the financial particulars. For a regular single-family homebuyer, putting down maybe 10%, you’re talking an FHA loan which requires an appraisal that is different from a normal appraisal, an FHA Appraisal is essentially akin to a home inspection in itself.
The banks look at a mortgage as a financial investment, there are many scenarios where the investment is sound enough, they don’t care that much about the state of the home. This can be particularly true for mortgages offered to investors (which have higher down payment requirements and other features that relatively protect the bank), in some markets a person could be coming to the bank for a loan that’s for less than the value of the land the house sits on, in which case they aren’t all that worried about the home as they are downside protected automatically.
This is the thing. First, if there is obvious need for repairs then the appraisal will be much lower.
(My parents’ house sold for maybe $50,000 under market value because it needed serious cosmetic fixes - the oak strip flooring needed refinishing, the bathroom was circa 1930, my nieces had lived with them a few years and the one bedroom wall was a mess of staples, the front door no longer opened, The garage door fell off its track, the fence in the yard was rotten… etc. At 90 my dad had slowed considerably in assorted maintenance.)
The other point is that if someone is buying a house with 10% down or 5% down, odds are they are on the hook for the equity - the bank can probably sell it to recover the 90% mortgage principal - so the buyer is out the down payment money.
I wonder how often the problem is hidden? Termites or mold, I presume, are not impossible to find. Serious structural alterations That compromise the building? How often are inspection reports just itemized lists of minor issues? But generally, inspectors are not allowed to cut into walls or otherwise damage to inspect?
(A fun series to watch when it was on, was the Holmes on Homes series where they found the horror stories of bad builders and contractors…)
If the bank floated a 90% loan to value and have to foreclose on the home the bank is going to loose a lot of money. Un less the house price has gone up a considerable amount. The bank will have to absorb the cost of foreclosing. The commission to re sale the house. The various fees in selling a home.
10% of a $300,000 house is $30,000. What would foreclosure and sales costs be, that exceed $30,000?
Yes, the hassle and potential cost of selling again will cost money, nobody wants to do that, but the point is the first $30,000 is “prepaid” from the bank’s perspective. It is less of a risk than the buyer, who will have flushed $30,000 down the drain. Plus, in some jurisdictions the buyer then owes the bank whatever balance is not recovered at sale. Everything is a risk, but it’s less of a risk for the bank than for the buyer. So the bank can take comfort in the fact that the buyer, assuming much of the risk, is also going to be (or should be) diligent about the quality/value of the purchase.
A bank foreclosing on a house is not just show up with paper and ask the people to move out. It is expsive and involves many steps over a few months. In fact in 2008 some banks were paying 10 to 20 K to have people move out of houses that they had gone through the foreclosure proceedings. And if they resist it can be even more months to get the eviction. And not many home owners who are going to loose their house keep making house payments, that means the bank is loosing interest each month. NOt sure what this total will be but it is easly to believe it will run into the thousands.
Then when the prior owners move out the house will have to be cleaned up and repairs made to sell it, or the bank will take a loss in the sale. I did not have to make any major repairs when I sold my house but I did spend quite a few thousands preparing the house for sale.
Then there is the resale of the foreclosed house. 6% commission to the real estate agents that is $18,000. And there are various fees the seller has to pay in a sale.
When everything is added up I doubt much if anything will be left of the $30,000.
Plus, in some jurisdictions the buyer then owes the bank whatever balance is not recovered at sale. The bank can try and recover the balance. But most of the they time they will unsuccessful.
There is a reason why investors purchasing a home are required by most bank to have a 25% down.
All this does depend on the market at the time of the foreclosure and resale. If the $300,000 is now worth $400,000 the bank probably will not loose any money. But if the home is now worth $200,000 they are never going to recover their losses.
And yes the buyer has a lot to loose if their house goes into foreclosure.